When you hear about Bitcoin or Ethereum, it may seem like an underworld currency in a virtual banking system and suspicious traders sitting behind computers. However, people make millions of dollars by investing in cryptocurrency, and it is believed that crypto will fix the problems of traditional currencies.
You can read about crypto online, on a cryptocurrency blog or forum, on social media, and use many other resources such as this article. Here are the four reasons you should educate yourself on this subject and understand why more and more people are investing in crypto.
What is crypto?
Crypto is a digital currency that is believed to be a more secure exchange monetary medium than traditional currencies. Its transactions are irreversible, public, and controlled by the users, which makes them safer.
Essentially, cryptocurrency is entirely decentralized, like blockchain-based platforms are made to be. It is not controlled by any financial authority or central bank. Instead, it is supported by a peer-to-peer community. Basically, it is a computer network that consists of users’ machines or “nodes”.
A Bitcoin cryptocurrency is safe, as it has been digitally authorized by a method called “mining”. This is a process where every new transaction to the Bitcoin digital currency system has been mathematically checked and verified, using a highly complex digital code set up on the network, as well as the process of how the new Bitcoins enter the circulation.
That blockchain network will document and verify all new entries into the ledger and register any changes that have been made. While fundamentally anonymous, every transaction can, nevertheless, be traced through cryptography because of the public transaction ledger.
Why is it important?
Bitcoin was the first cryptocurrency, created by Satoshi Nakamoto in 2008. Its value has significantly increased to a tremendous level. More and more online shops and retailers are starting to acknowledge Bitcoin as a payment method.
Ethereum is very similar to Bitcoin. However, it provides built-in software programming languages (e.g. smart contracts) that can be used for numerous purposes, including the transfer and mining of its tradeable digital token, Ether.
At the beginning of 2017, the cryptocurrency went through a procedure called “mooning”. This means that their prices went utterly and ridiculously high, making it the wrong time to invest in crypto. After that, in January, it crashed again, with Ethereum prices dropping by around 25%.
Nevertheless, cryptocurrency is important because its transactions are digital and secure, which minimizes the risk of fraud and allows maintenance without the risk of data being corrupted.
A currency like Bitcoin shouldn’t result in inflation. None of the central banks can ever have as much cash in the system. Some think about cryptocurrencies as infinite, as they can be forged by anyone. A survey conducted in 2021 showed that 25% of US teens prefer cryptocurrency investments to traditional ones.
Cryptocurrency transactions and security
It is possible to make a private transaction with traditional currencies. This is usually done by paying in person, using cash. However, large amounts of cash are monitored and reviewed by financial system regulators and governments. This is a good thing because it maintains the currency’s legitimacy and prevents criminal actions like money laundering.
As for cryptocurrency, a program tracks the exchanges between users or companies, and this happens mostly anonymously. The ledger of transaction lists is public, but the identities of users exchanging it are more private.
Cryptocurrencies are preserved in digital wallets, and the owner has their private key to the wallet. They are exchanged from one anonymous wallet to another.
Why should you invest in crypto?
The world’s economy is shifting to a digital ecosystem. Everything seems to be digitalized and paperless nowadays. Having cryptocurrency is like having USD, but it’s adapted to the exchange of digital information. It is decentralized, so it is not owned by any central authority, so the government cannot take it away from you.
Blockchain technology provides secure transactions through “smart contracts” that make the entity unhackable and safe from fraud. It’s convenient and easy to use. All you need is a mobile phone or a computer and an internet connection so you can make payments and transfers with just a few clicks.
Bitcoin and Ethereum networks became so big that is almost impossible to hack them. But the smaller networks are still more vulnerable to hacking and the investors should keep that in mind.
Conclusion
Cryptocurrencies have created a new perspective on money. It is up to you to decide how cryptocurrency fits into your life. As blockchain technology continues developing, the need for it will become more apparent. With cryptocurrency, you get an instant settlement, it’s accessible, and you have total control over your money.
